Can you renegotiate apartment management fees ?

Ole Rodrigo

Is this possible if you believe you're being overcharged for the service provided ? My understanding is the fees are determined by the projected rental income of a property, which does not seem to take into account that the property maybe owner occupied. That is to say why should a three bed be charged anymore than a two or a one bed if it uses the same utilities and is owner occupied and is not generating any income. Fees also went up considerably during the boom years and never went back down when the associated costs fell. Is this reasonable grounds to ask for or expect a lower maintenance fee?

wexford12

Maintenance fees are based on how much it cost for the up keep of the estate or apartment block. Your management co should be on your side as you and your neighbours should own it.If not there still should be accounts showing the costs of running the development which should be split between each house / apartment.
Have costs come down I don't think so electric bill has gone up insurance etc etc. One of the main reasons people are paying more than they should or would off is because there are so many empty units in new estates and apartment blocks.These empty homes don't have to pay because most have no kitchens or bathrooms hence come under the " not a home that can be lived in".
Should a 3 bed pay more than a 1 bed "No" why would they you are paying for the outside of your home not the inside it does not cover getting your sittingroom and bedrooms painted etc

godtabh

wexford12 wrote: »

Should a 3 bed pay more than a 1 bed "No" why would they you are paying for the outside of your home not the inside it does not cover getting your sittingroom and bedrooms painted etc

That depends.

Should a 3 bed apartment on a 5th floor pay more than a 1 bed on the first floor? I believe yes because lift use would be more frequent. Items like this need to be taken into account

Ole Rodrigo

That's what I thought. Those fees were arrived at - ie, that a 3 or 2 bed pays more than a 1 bed - on the basis that it would be rented out and would receive a higher rental income, which is dubious enough in itself but particularly so when its an owner occupier who is not profiting by the difference in property size and uses the same utilities. How could this be addressed ? I've already mentioned this to the management company who have not given a satisfying response.

Ole Rodrigo

Its a small development with no lift system, and no reason that I can see why the 3 bed should cost any more than the rest.

Oral Surgeon

rocstar wrote: »

Its a small development with no lift system, and no reason that I can see why the 3 bed should cost any more than the rest.

A large proportion of the fees are for waste/bin removal. So a 3 bed will fill up more bins than a one bed....

jd

The formula is normally set out in your (999 year or so) lease. Did you check that out?

pinkypinky

I think you are misunderstanding the whole management company structure. Most apartments are not built with the idea that everyone will be landlords.

Every owner is a member of the management company. Usually the board of directors contract a managing agent to run a development, which is overseen by them.

The budget is designed based on actual costings of things like electricity/insurance/maintenance, etc. It is not based on projected income for those owners who choose to rent out their properties. And it would be chaos if it were. Budgets are also based on 100% of service charges received, whether or not this is actually the case.

In a development of only apartments, costs are apportioned usually based on the number of bedrooms. If the development has duplexes or houses with own front doors, they normally have a significantly smaller charge because they wouldn't use the main apartment block at all and have no common areas.

You can't start factoring in that people on the ground floor never use the lift or that only top floor people should pay for roof services: these are all communal items.

The way to get your service charges down is simple:

If you don't have a projected budget, ask for one. This should clarify everything. If a budget is not forthcoming, that is worrying, and then you should contact the directors of your mngt company, or attend the next AGM if it is soon.

If there is not a proper setup in place, then it is up to owners to get involved and get one started.

rocstar

rocstar wrote: »

Its a small development with no lift system, and no reason that I can see why the 3 bed should cost any more than the rest.

It is nothing whatsoever to do with rental income.

A three bedroom apartment costs more to insure, the likelyhood is that there will be more people living there so they are using the "grounds" more, the area outside the apartment will be bigger so larger area to clean & light etc. As someone else pointed out, if the bins are communal then the chances are that the three bed will use them more.

Kosseegan

godtabh wrote: »

That depends.

Should a 3 bed apartment on a 5th floor pay more than a 1 bed on the first floor? I believe yes because lift use would be more frequent. Items like this need to be taken into account

It is never going to happen. The reason bigger units pay mor is because the insurance is per square foot. Exterior maintenance and window cleaning are also greater in bigger units. The cost implications for a management company trying to apportion charges according to use of facilities would be grater than any saving. Some individuals use bins more than other, some use lifts more, some go in and out of the rfront door more often thus increasing wear on the locks. Where would it end? Service charges can be re-negotiated by amending the lease. The chances of getting agreement to do it are minuscule.

godtabh

rocstar wrote: »

That's what I thought. Those fees were arrived at - ie, that a 3 or 2 bed pays more than a 1 bed - on the basis that it would be rented out and would receive a higher rental income, which is dubious enough in itself but particularly so when its an owner occupier who is not profiting by the difference in property size and uses the same utilities. How could this be addressed ? I've already mentioned this to the management company who have not given a satisfying response.

Its not based on rental income. Its based on use of service.

Ole Rodrigo

I understand that, but apart from the block insurance the utilities are the same as the other units - yet the fee is almost twice that of a one bed. To be honest I can accept it if it is just insurance, just a bit surprised and peeved it would account for such a difference.

pinkypinky

rocstar wrote: »

I understand that, but apart from the block insurance the utilities are the same as the other units - yet the fee is almost twice that of a one bed. To be honest I can accept it if it is just insurance, just a bit surprised and peeved it would account for such a difference.

Do you mean common area utilities? Presumably within your own property you are paying your own.

godtabh

rocstar wrote: »

I understand that, but apart from the block insurance the utilities are the same as the other units - yet the fee is almost twice that of a one bed. To be honest I can accept it if it is just insurance, just a bit surprised and peeved it would account for such a difference.

no its not. You use twice as much refuse. You use twice as much electricity etc etc. Not a direct correlation but use will be greater for bigger properties which is reflected in service charge.

My management fees for a one bed 4th floor apartment are the same as a 2 bed 2nd floor apartment but less than a 2 bed 3 floor apartment.

My management company provides me with a break down and I have compared it with neighbours

Ole Rodrigo

Oral Surgeon wrote: »

A large proportion of the fees are for waste/bin removal. So a 3 bed will fill up more bins than a one bed....

The bin charges are separate and uniform to the best of my knowledge.

jd wrote: »

The formula is normally set out in your (999 year or so) lease. Did you check that out?

I haven't checked this out but I will - thanks.

Ole Rodrigo

pinkypinky wrote: »

Do you mean common area utilities? Presumably within your own property you are paying your own.

Yes common area utilities. There could be an argument for increased bin usage but I live alone so its not the case. And certainly not for wear and tear on locks , carpet footfall or electricity etc.

Thanks for the comments - there is a point in paying more for than a one or 2 bed but its the difference, to my mind, that seems out of whack.

Kosseegan

rocstar wrote: »

Yes common area utilities. There could be an argument for increased bin usage but I live alone so its not the case. And certainly not for wear and tear on locks , carpet footfall or electricity etc.

Thanks for the comments - there is a point in paying more for than a one or 2 bed but its the difference, to my mind, that seems out of whack.

How is the managem,ent company going to monitor usage of apartments? Would you be willing to pay the wages of a bookkeeper to caslculate service charges according to actual usage. Would you have neighbours spying on each other so they could argue that so and so haaas someone living there and are not telling the management co? The leases are framed originally and are on the basis that a larger unit costs more to insure and is likely to have more people living in it and therefore use of common facilities. If you don't want to pay the higher charge, sell up and buy a smaller unit.

athtrasna

OP it really sounds like you don't understand the whole management company/fees thing at all. Pinkypinky gives good advice, I would also direct you to Robert Gogan's book - A Guide to Aparment Living - which explains in detail.

To answer your question - fees are never based on rental incomes. Most developments built in the past ten years have management companies, and fees are paid. You will find the calculation formula for your development in your lease, signed at purchase. That is how fees will always be calculated. You might not think it's fair now but it is what you've signed up to.

If you think fees are too high, get informed and get involved. Check out the development budgets, go to AGMs, stand for election as a director.

Ole Rodrigo

I wouldn't say that is true at all. I payed fees without question but now I do question them and see that I am not getting value for what I pay. And that is really the point - value for money, and I'm not getting it. Although I did not fully consider the block insurance costs determined by square footage.

If I understood all aspects of this I wouldn't have started the thread in the first place, athtrasna. I wanted to hear what others had to say on the matter.

The company who built the development own the majority of apartments and control who is voted in as director at the AGM. So their interests are a priority and I imagine would be reluctant to shoulder an increase in their fees so mine can be reduced ( if this were even possible ). Besides, you shouldn't have to assume the role of director to ensure fees are fair.

Paulw

Do you attend your AGM?

Do you read the proposed budget each year?
Do you read the audited accounts that should be provided each year?

Did you read your Lease Contract? What does it say about management fees? It should give you the exact criteria on how management fees are worked out. Normally it's the sq ft space of the whole place divided by the sq ft of your unit. It's a simple maths formula.

Ole Rodrigo

Paulw wrote: »

Do you attend your AGM?

Do you read the proposed budget each year?
Do you read the audited accounts that should be provided each year?

Did you read your Lease Contract? What does it say about management fees? It should give you the exact criteria on how management fees are worked out. Normally it's the sq ft space of the whole place divided by the sq ft of your unit. It's a simple maths formula.

Yes to all the above except for that lease contract. Now that I know, I will take a look. Thanks. I hope its a simple maths formula, otherwise I might struggle coz I'm a bit thick like that. I could then start another thread looking for more advice from smarmy internet dorks. Or not.

Paulw

rocstar wrote: »

Yes to all the above except for that lease contract. Now that I know, I will take a look. Thanks. I hope its a simple maths formula.

Your management fee is a percentage of the total fee for running the development for a year. It doesn't matter what facilities you use or don't use. You still just pay your percentage.

If there is 1 person, or 10 living in your unit, it doesn't matter. The percentage is based on the sq ft of your unit (or sq m).

That's in general. But your own Lease Contract will exactly specify how your portion is calculated, based on the overall budget for running the development each year.